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Recent government figures confirm personal debt is at a record high of £58,733 per household (Daily Mail Financial Report 14 November 2008). Many people feel trapped in a cycle of debt unable to pay off any or all of their debts over a reasonable time scale.

Often the debt is due to irresponsible spending and because lenders have given record amounts of credit with less restrictions or proper affordability checks in place. This together with a lack of understanding about how the money market works, has left many people in crisis; more so with the underlying credit crunch involving loss of income and potentially loss of their homes.

The Consumer Credit Acts aimed to give the Consumer protection against lenders who imposed unfair terms and conditions in their credit agreements. In fact creditor companies, with all the resources at their disposal, couldn't get right what boils down to four or five prescribed terms in consumer agreements. It showed a lack of consideration and care offered to their customers. Few people were aware providers would not take the requisite care to ensure agreements were properly sold with adequate records in place to substantiate those agreements.

Following the 2006 Act, which revoked Section 127(3) of the 1974 Consumer Act in 2007 providers were obliged to take stock and review their agreements. The 2006 amendment was not retrospective and so over the past year it has been discovered many agreements for loans, hire purchase, credit and store cards issued prior to April 2007 failed in some way to comply with the 1974 Act; resulting the possibility of such agreements being unenforceable. It is not easy to estimate what percentage of agreements prior t0 April 2007, did not comply with the law. Agreements having prescribed breaches give the Consumer the right to challenge the Agreement. If it is deemed unenforceable the Consumer can apply to have the balance of the Agreement written off. However there are several 'degrees' of being unenforceable. Only those agreements where there are 'major' breaches will the provider 'automatically' write off the balance outstanding. Other breaches might have to be challenged in a Court of Law.

UK lenders have been aware for some time of the potential claims that could be made and prudently have made provisions to meet what they expect to be a vast number of claims, once public awareness became the norm.